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Quebecor Issues $1.35 Billion in U.S., Canadian Dollar Bonds

Oct. 3 (Bloomberg) -- Quebecor Inc., the Canadian media company, increased an offering of U.S.- and Canadian-dollar-denominated bonds by 36 percent to $1.36 billion and will use the additional proceeds to retire debt.

The company, through its Quebecor Media Inc. unit, issued $850 million of 5.75 percent U.S.-dollar-denominated bonds and C$500 million ($506.4 million) of 6.625 percent Canadian-dollar-denominated debt, according to a person familiar with the transaction. The securities mature in January 2023.

Proceeds will be used to purchase C$1 billion of equity from shareholder CDP Capital d’Amerique Investissements Inc., a unit of Caisse de Depot et Placement du Quebec, according to a person familiar with the transaction, who asked not to be identified citing lack of authorization to speak publicly. The additional $356 million of proceeds will help retire a portion of Quebecor’s $700 million of 7.75 percent March 2016 debt, according to a second person familiar with the transaction.

“The company is pitching this as a way to obtain an ’optimal leverage profile’ and the preservation of ‘operational and financial flexibility’,” Spencer Godfrey, an analyst at Montpelier, Vermont-based KDP Investment Advisors Inc., wrote in a report today. “We fail to see how this improves the capital structure or how operational and financial stability is preserved considering the material increase in leverage.”

Quebecor last sold debt in June, issuing $799 million of 5 percent, 10-year debentures through its Videotron Ltd. unit, Bloomberg data show.

The U.S. dollar-denominated portion of the sale was managed by Bank of America Corp., Citigroup Inc., National Bank of Canada and Toronto-Dominion Bank, Bloomberg data show. The Canadian dollar-denominated part of the Montreal-based company’s offering was run by Bank of Nova Scotia, Bank of America, Royal Bank of Canada and Toronto-Dominion Bank.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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